Parliament has summoned Central Bank of Kenya Governor Kamau Thuji and Capital Markets Authority CEO Wycliffe Shamia over suspicious bond trading between some brokers and the National Social Security Fund.
The National Assembly’s Finance and National Planning Committee wants the two regulators to shed light on alleged irregularities in bond transactions involving two accounts at the National Social Security Fund’s Centre for Securities Depository (CSD), and the accounts of an individual and a local commercial bank.
Kimani Kuria, a member of parliament for the Molo party and chairman of the finance committee, said allegations that the social security fund bought bonds at a much higher price and sold them at a lower price were heavy allegations, and warned that those involved would be held accountable if proven true.
“We have started inviting regulatory institutions to come and tell us what they know about questionable transactions,” he said.
The parliamentary investigations into the matter come after the Central Bank of Kuwait discovered and reported to the Capital Markets Authority the questionable bond dealings carried out by the Social Security Fund.
At the heart of the CBK letter dated 19 August 2024 to Mr Shamieh is the transaction of questionable bonds through the NSSF CSD accounts, the Humphrey Wachira Gichuru accounts and Pergamon Investment Bank Limited.
“The Central Bank of Kenya wishes to draw your attention to certain irregular transactions that took place between May and July 2024 between NSSF Kenya, Humphrey Wachira, and Pergamon Investment Bank Limited,” read the letter signed by the Central Bank of Kenya’s Director of Financial Markets, David Loza.
According to the letter, the National Social Security Fund’s CSD accounts involved in the trade are 114813-0004 and 142816-0004, with Mr. Wachira’s CSD accounts 234783-0004 and 265560-0004 and Pergamon Bank’s CSD accounts 245351-0004, 207255-0004 and 245221-0004.
“The purpose of this letter is to request the CMA to review the conduct of the above parties and share the actions taken with the Central Bank of Kenya,” he said.
According to Mr. Lowa, the CBK’s analysis of the transactions between the two parties indicates that the Kenya Social Security Fund was buying bonds at prices well above the market average, “while in some cases, the Kenya Social Security Fund sold some bonds at lower prices and bought the same bonds at higher prices within a few days.”
Mr. Shamiya was asked to contact the Deputy Director of the Central Bank of Kuwait responsible for debt management to obtain details of specific transactions related to the Social Security Fund bond trades, but he was not available to explain the steps taken to address the concerns raised by the Central Bank of Kuwait.
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